California health exchange includes 13 insurers

Premiums will range from zero to $687 a month, average is $300

By

RussBritt

LOS ANGELES (MarketWatch) — Policyholders will pay anywhere from nothing to $687 a month in insurance premiums under California’s health exchange, a program that will involve the participation of 13 carriers who will compete to offer coverage for the nation’s most populous state.

The first to unveil its proposal for complying with President Obama’s health-care law, the exchange known as Covered California rolled out its proposal to cover as many as 5.3 million of the state’s residents, with half of those eligible for subsidies.

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Officials estimate the average premium will be around $300 a month after subsidies, but that will depend on a number of factors, they caution.

As the nation watches how California’s vast and complex program fares once it starts accepting enrollees beginning Oct. 1, its principals caution there will be pitfalls as it moves forward.

“The journey toward universal coverage isn’t complete. It just starts here,” said Paul Markovich, chief executive of Blue Shield of California, one of the 13 carriers offering coverage in the exchanges. “The complexity of this mission is daunting. It will be imperfect. And we will make it work.”

The rates still have to be reviewed by California’s insurance department. Also still to be examined by regulators is how much profit each of the carriers will retain. California insurance officials stress, however, that they currently do not have authority over the setting of rates.

Further, not all 13 carriers will be servicing the entire state; in some of the state’s less-populous regions there will be only three competing networks. The greatest variety will be found in California’s biggest cities -- Los Angeles, San Francisco and San Diego. L.A. and San Diego will have six carriers to start with while San Francisco gets five.

Among the major publicly traded carriers are WellPoint Inc.’s
US:WLP
Anthem Blue Cross of California, Health Net Inc.
US:HNT
and Molina Healthcare Inc.
MOH, +1.15%
The rest include a number of non-profit insurers such as Blue Shield and Kaiser Permanente, as well as a number of local entities.

Conspicuous in their absence, however, are three major insurers: UnitedHealth Group Inc.
UNH, +2.21%
, Aetna Inc.
US:AET
and Cigna Corp.
CI, +0.17%
The Los Angeles Times reported Thursday that the three wouldn’t participate in the exchanges, but said they held only 7% of the individual insurance market.

The state’s three biggest individual insurers are Kaiser, Anthem Blue Cross and Blue Shield, with a collective 87% of the market. All three will participate in each of 19 different geographical markets set up by Covered California, with the exception of Kaiser, which isn’t taking part in the Santa Cruz-Monterey region.

Premium pricing depends largely on where the plan is offered, the age of the policyholder, how many doctors and hospitals are in the network and what subsidies are available. A full report is available here.

“Consumers, for the first time, can make real apples-to-apples comparisons,” said Peter V. Lee, Covered California’s executive director.

Lee said that despite fears over a spike in premiums, the rates under the exchange actually bring down premiums overall, in some cases by as much as nearly 30%.

At one extreme, subsidies would cover the entire average monthly premium of $172 for a 21-year-old at 150% or less of the federal poverty level, or no more than $17,235 in annual income.

That is available if the policyholder isn’t covered under a parental plan, and opts for so-called “bronze” program in which 60% of costs are covered. There also are higher levels, called silver, gold and platinum that cover 70%, 80% and 90% of costs, respectively. A low-rent catastrophic plan is available but isn’t covered by subsidies.

At the other extreme is Anthem Blue Cross’s $687 platinum HMO plan for 40-year-olds and older, available in the Sacramento region and surrounding counties.

Most policies, however, fall somewhere in between. A 40-year-old who doesn’t qualify for subsidies in Los Angeles will pay anywhere from $188 for an HMO called L.A. Care in the northern part of the county to $429 for Kaiser Permanente’s plan in the southern part of the county.

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